Rising from the ground: Gujarat's mining sector

By IBT Staff Reporter On 05/03/10 AT 11:44 AM

Over past fifty years, Gujarat has been a key contributor to India's industrial development specifically on the back of its resource richness minerals. Mineral resources, which are the important factors for the growth of state economy, are equally important as a yardstick to measure the overall economic growth.

Gujarat, better known for its manufacturing sector, has been a rich source of various minerals that are directly or indirectly a basic raw material for strategic industries in the country. Geologically, the state of Gujarat consists of varieties of rock ranging from oldest Precambrian to dinosaur bearing Jurassic and Cretaceous and lignite, oil and natural gas bearing tertiary and quaternary rocks.

Mining activity in Gujarat is almost equally old as its existence as a separate state since 1st May, 1960. So far, Gujarat has been ranked 3rd in mineral production value as on March 2002, while the state ranks second in working mining leases. The state is the lone producer of minerals like Agate, chalk and perlite in the country, which are used in industries like, jewellery and pulverizing.

Gujarat tops in fluorite and silica sand, while it stands second in bauxite, lignite, fire clay and clay. In production of Quartz and Ball clay, Gujarat ranks third and in limestone and China clay, the state is fourth among other minerals producing states in the country. The state produces 11 metallic, 52 non-metallic and 22 minor minerals among all.

A latest report from the state government indicates that the value of mineral production of the state, for the year 2007-08 stood at Rs.6559 crore, in which oil & natural gas took the largest share of Rs.4378 crore and major minerals cornering Rs.1455 crore.

As per the provisional estimates, the production of agate, Steatite (soap stone) and Gypsum during the year 2007-08 was 10,1149 and 390 tonnes respectively. The production of limestone, lignite, bauxite, laterite and dolomite were 23390, 11787, 13065, 237 and 493 thousand tonnes respectively.

The socio-economic review of the Gujarat state for 2009-10 further reported that the production of petroleum oil (crude) and Natural gas was 6177 thousand tonnes and 2931 million cubic meters respectively.

Geographical allocation of specific minerals has helped some key industries to grow in different pockets in Gujarat. Limestone-rich Saurashtra region has witnessed some of the noted cement manufacturers setting up cement and soda-ash plants here. Some of the leading players include, Gujarat Heavy Chemicals Ltd (GHCL), Gujarat Ambuja Cements Ltd, UltraTech Cements Ltd, JK Lakshmi Cement and some more renowned companies have made heavy investments in the region.

Gujarat has earmarked mineral exploration reserves of 18 important minerals, due to which the state has become one of the favoured destinations for the investments in mineral-based industries. There is ample opportunity to establish mineral oriented industries like lignite-based power plants, bauxite-based alumina plant, marble & granite based cutting, polishing plants and silica-based glass units. In the latest development, the state government has decided to put its new mining policy on the fast track that is expected to give boost to the eight key cement makers, including Reliance Cement, Ambuja, Dalmia, Binani, JK Lakshmi and Shree Cement.

The inflow of investments in mining and production continues as Jaiprakash Associates has recently set up 2.4 mtpa of capacity at Sewagram near Kutch with an investment of Rs.1,500 crore. Binani Cement has acquired about 25 acres for setting up a two-million-tonne plant in the State for Rs.1,000 crore.

In the coal mining sector, Gujarat's public sector enterprise, Gujarat Mineral Development Corporation (GMDC) has achieved significant milestones over the years in producing bauxite and lignite. GMDC is among the top few lignite mining companies nationally next to Neyveli Lignite Corporation Limited. Gujarat has coking coal majors like Gujarat NRE Coke Ltd and Austral Coke located in Kutchh with their mining presence.

Lignite production at GMDC mines during the year 2007-08 was recorded at 9967164 metric tonnes, which has declined to 8107771 metric tonnes during 2008-09, while bauxite production stood at 798347 metric tonnes, which declined to 414286 metric tonnes in 2008-09. The sale from Lignite project of the corporation was Rs.742.99 crore in 2008-09 as against Rs.780.85 crore in 2007-08.

Mining activity in the state has perked up on the back of strong industrial infrastructure, logistics support and policy backing. Mining industry in Gujarat is, probably the only industry in Gujarat, which has brought-in huge infrastructure investments. The state has developed rail network so as to reach to every corner of the state, where mobilization of minerals is required.

Saurashtra, north Gujarat and Kutchh regions, which are dry in terms of average annual rainfall but rocky in geographical term, have become highly industrialized due to intense mining activities. In the wake of the current industrial proliferation in the state, where power and manufacturing industry has taken a driving seat, let's not forget that Gujarat's mining sector has played a role of strong foundation for building the industrial infrastructure in state.

Going further, the state, with its new industrial policy and mining policy, seems to be creating even more conducive environment not only for investments in production but also for research and development in mining sector in Gujarat. The sector has shown its potential to emerge as one of the largest sectors in the state, provided new technology and fresh capital is deployed to lead the state mining industry to yet another level of excellence in coming decades.

This is the 2nd of 7 articles from the Gujarat Golden Jubilee Celebrations Series by CommodityOnline